GAAR amendments finalized: Chidambaram

Nov 19, 2012, 05.29AM ISTAgencies

NEW DELHI: Amendments to General Anti-Avoidance Rules (GAAR), the controversial law against tax avoidance through foreign investments, have been finalized, finance minister P Chidambaram said on Sunday.

"I have finalized the amendments to the Chapter 10A of the Income Tax Act. Now it will go to the PMO and then we should be ready with the amendments and then the GAAR rules will reflect the amended Chapter 10A. That is under preparation and I think the work is almost complete.

The drafting work is complete. So, GAAR is under control . I have taken the decisions , subject to Prime Minister's approval and then Cabinet ," he said in an interview . Chapter 10A of the Income Tax Act deals with taxation of investments.

GAAR, which was proposed in the 2012-13 Budget with a view to preventing tax evasion, evoked sharp reactions from foreign as well as domestic investors who feared that unbridled powers to taxmen would result in harassment of investors . The government later appointed a committee headed by tax expert Parthasarthi Shome to look into their concerns.

Chidambaram, during the interview, spoke on a variety of subjects including his optimism on meeting disinvestment and spectrum sales target , confidence on pushing through with reforms measures and the relationship with RBI which he said was not antagonistic.

On the issue relating to retrospective tax amendment on which the Shome Committee had submitted its report, he said: "The CBDT has given its views. I have taken decisions at my level. The drafting is going on. Again it will go to the PMO and then to the Cabinet."

Referring to the Direct Taxes Code (DTC), a bigger matter, he said, "We have now started work. This morning I spent two hours on that. Earlier I had spent several hours. We are looking at it. We have tabulated it... will take final decision."

Chidambaram also said central PSUs have been put on notice to either invest their surplus cash or lose it. At present, about 25 central PSUs, including blue chips like ONGC, GAIL, NTPC, SAIL, and BHEL, have surplus funds worth Rs 2.5 lakh crore.